US to Limit Textile Imports from China
Decision comes under pressure from ''threatened'' US industry
WASHINGTON, DC - 11/19/03 - The Bush Administration has said it will restrict imports of knit fabric, robes and brassieres from China amid complaints from US manufacturers and lawmakers that unfair competition is costing mill jobs in states such as North Carolina, reports the Bloomberg Newswire.
The US Commerce Department, it said, has drafted plans that would limit import growth for those products to 7.5% per year.
The action - vocally supported by the US textile industry - was opposed by a major trade group made up of import-reliant big-ticket retailers such as J.C.? Penney Co. and San Francisco-based Gap Inc., which have both said that consumer prices will rise if the restrictions are put in place.
"What the administration is saying to textile and apparel makers in this country is that `We feel your pain',"said Gary Hufbauer, a senior fellow at the Institute for International Economics, a Washington, DC-based trade research group.
?Hufbauer said today's action may be the first in a series of actions against China that could take place over the next year.
Commerce Secretary Donald Evans, Treasury Secretary John Snow and other officials have urged China over the past year to open its doors to more US exports and investment.
Interest groups assert some 2.6 million manufacturing jobs have been lost in the US since the President took office with a number of lawmakers blaming at least some of the decline on China's trade policies and a currency pegged to the dollar.
"This decision is based on politics, not facts," said Erik Autor, an attorney for the National Retail Federation, a retail trade group.
Autor said the ruling will "create shortages that could lead to dramatic increases in prices for American consumers while doing nothing to protect American jobs."
More than 250 US textile plants have shut their doors since 1997, including more than 50 in the last 18 months, according to the American Textile Manufacturers Institute, which also charges that current policies have cost more than 200,000 textile workers their jobs over the past six years.
The largest firing in the history of the domestic industry occurred in July, when Pillowtex Corp. of Kannapolis, North Carolina, closed operations and dismissed 6,450 workers.
"Every time the US imposes more trade sanctions, it's a sign the dollar is going to weaken,'' said Kenneth Landon, senior currency strategist at Deutsche Bank AG in New York. "At the same time, it's a sign of lower inflows into the country."
Steven Dunaway, the head of the International Monetary Fund's China team, said the US action "was a big risk." Dunaway said the move could prompt China to retaliate with similar measures. "It's the kind of situation the IMF strongly discourages," he said.
The limits, made possible through China's accession agreement to the World Trade Organization two years ago, would be imposed after consultations with Beijing, Grant Aldonas, the Commerce Department's undersecretary for international affairs, told reporters in Washington.
The temporary restrictions on textiles are the first from the U.S. since China joined the global trade arbiter.
"This covers a very small amount of the industry," said Wilbur Ross, chief executive of WL Ross & Co. His company this month completed its purchase of Burlington, which filed for bankruptcy in 2001, and plans to buy Cone Mills Corp.
Both textile companies are based in Greensboro, North Carolina.
"These are good first steps," Ross said in an interview. "We need to take more dramatic steps."
Ross also supported the steel tariffs that the President imposed in March, 2002. His International Steel Group Inc. became the second-largest US steel maker by buying companies including Bethlehem Steel Co. and LTV Steel Co. out of bankruptcy.
Those steel protections have been ruled illegal by the World Trade Organization. Prime Minister Tony Blair has said he will urge the President, who is visiting the UK, to scrap the duties.
Aldonas said the administration was trying to address the competitive advantage China has as a result of price controls set by state-owned industries.
"There are distortions introduced by the heavy state economy" in China, Aldonas told reporters, adding that the decision "came in response to concerns expressed by Senator Elizabeth Dole, a North Carolina Republican, and other lawmakers in states that have lost jobs as a result of the surge in textile imports."
Chinese sales of textiles to the US rose 63% to $3.15 billion in 2002, according to figures released recently by the Commerce Department.
They are on the way to exceeding that total this year, and representatives of US companies say that a worldwide agreement to end restrictions on textile trade in 2005 "could leave China as the only producer of textiles in the world."
The US trade deficit widened in September to $41.3 billion, as the deficit with China reached a record $12.7 billion. The US deficit with China this year may reach $130 billion, which would be the most every registered by the US with any country.
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